Gold & Silver Daily

Ed's Critical Reads

Mar 28, 2015

Final Q4 GDP Unchanged at 2.2%, Below Expectations; Corporate Profits Tumble

So much for the "self-sustaining escape-velocity" recovery---again.

After rising at an annualized pace of 4.6% and 5.0% in Q2 and Q3, the final Q4 GDP estimate (a number which will still be revised at least 3-4 times in the coming years), slid more than half to 2.2%, the same as the second estimate from a month ago, and below the consensus Wall Street estimate of 2.4%.

The worst news was the following: For the year 2014, profits from current production decreased $17.1 billion, in contrast to an increase of $84.1 billion in 2013. Profits of domestic financial corporations decreased, and profits of domestic non-financial corporations increased. The rest-of-the-world component of profits decreased $9.0 billion in 2014, in contrast to an increase of $1.3 billion in 2013---and the fact that profits are now declining is not what those advocating EPS growth would like to see.

In short: a number which confirms the U.S. economy is once again slowing down, and will hit the breaks when in one month the BEA reports that Q1 GDP was at or below 1.0%, with snow in the winter getting the bulk of the ridiculous blame once again.

This news item was posted on the Zero Hedge website at 8:41 a.m. EDT on Friday morning---and today's first story is courtesy of reader M.A.

View full GSD edition

UMich Consumer Sentiment Drops For 2nd Month in a Row, First Time Since Oct 2013

For the first time since October 2013, UMich Consumer Sentiment dropped for consecutive months (printing a final 93.0 for March down from 95.4 in Feb, but above the flash print earlier in the month). Under the surface there are concerns with an increasing number of respondents noting that household finance are worse than 5 years ago, and an increasing number of people seeing now as a "bad time to buy" a house or car.

This tiny Zero Hedge story, complete with an excellent chart, is worth thirty seconds of your time---and it's the first offering of the day from Dan Lazicki.

View full GSD edition

Santelli Stunned as Janet Yellen Admits "Cash is Not a Store of Value"

Intended warning or unintended slip? After Alan Greenspan's confessional admission that "Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it,"---we found it remarkable that during the Q&A after her speech today that Janet Yellen, when asked about negative rates, admitted that "cash in not a very convenient store of value," seemingly hinting at Bernanke's helicopter and that there will be no deflation in The U.S. ever...

Rick Santelli then sums it all up perfectly..."deflation is clearly the boogeyman... and the only thing that will save the middle class."

These two brief video clips appeared on the Zero Hedge website at 5:30 p.m. EDT yesterday afternoon---and it's the second contribution of the day from reader M.A.

View full GSD edition

John Crudele: Stock market rigging is no longer a ‘conspiracy theory’

The stock market is rigged.  When I started making that claim years ago — and provided solid evidence — people scoffed. Some called it a conspiracy theory, tinfoil hats and that sort of stuff. Most people just ignored me.

But that’s not happening anymore. The dirty secret is out.

With stock prices rushing far ahead of economic reality over the last six or so years, more experts in the financial markets are coming to the same conclusion — even if they don’t fully understand how it’s being rigged or the consequences.

Ed Yardeni, a longtime Wall Street guru who isn’t one of the clowns of the bunch, said flat out last week that the market was being propped up. “These markets are all rigged, and I don’t say that critically. I just say that factually,” he asserted on CNBC.

This commentary by John appeared on the nypost.com Internet site late Wednesday evening---and I thank Brad Robertson for sending it our way.

View full GSD edition

Yemen "Gulf Intervention" Premium Erased, WTI Tumbles Back Below $49

Well that was a quick geopolitical event.

On the heels of what was set to be crude's best week since July 2013, Stratfor clarifying little risk of disruption to crude supplies, Goldman confirming negligible impact from Yemen and more to Iran, and reports from Saudi Arabia that "this [Yemen] operation will not go on for long, I think it will be days," WTI crude has tumbled back to the $48 handle and erased all the "gulf intervention" premium - refocusing on domestic storage concerns.

As Reuters reports, The Arab military campaign against Yemen's Houthi militia is likely to last days rather than weeks, Yemeni Foreign Minister Riyadh Yaseen told Saudi-owned al-Arabiya television on Friday.

In answer to a question about whether he thought the Saudi-led operation, which began on Thursday, would last days or weeks or more, Yaseen replied: "I expect that this operation will not go on for long, I think it will be days."

This tiny Zero Hedge story has an excellent WTI chart embedded in it---and it appeared on their Internet site at 2:36 p.m. EDT on Friday afternoon---and the 'click to enlarge' feature is a must to view the graph.  I thank Dan Lazicki for sending it our way.

View full GSD edition

North American Railroads Caught by Speed of Crude-Oil Collapse

The slowdown that North American railroad companies had been bracing for in crude oil shipments has turned into a rout, with volumes falling faster than executives had predicted.

With energy companies scaling back drilling after prices for the commodity fell about 50 percent since July, industry executives and analysts anticipated that demand for hauling crude and extraction materials such as frac sand and pipes would slow after a four-year surge. They didn’t expect it to slow this much this fast.

“The impact is occurring more quickly than the rails originally projected to investors,” said Matt Troy, an analyst with Nomura Securities International Inc. in New York. “The consensus view was that very high double-digit growth would moderate to low double digits, and as we have seen in recent weeks we’ve broken that floor and in some cases gone negative.”

Rail stocks and tank-car leasing are reflecting the dwindling traffic. The Standard & Poor’s 500 Railroads Index posted its biggest weekly decline since October and lessors’ rates for oil cars have fallen by about a third in the last six months, Cowen & Co. said in a report on Friday.

This Bloomberg article, filed from Dallas, appeared on their Internet site at 6:22 p.m. Denver time on Thursday evening---and I thank West Virginia reader Elliot Simon for finding it for us.

View full GSD edition

Doug Noland: A Progressively Maladjusted “Economic Sphere”

These days, a momentous change in economic doctrine has policymakers openly targeting rising securities prices. It is believed that central bank Credit-induced wealth effects will stimulate spending, system-wide Credit expansion and, eventually, a steady 2% increase in the general price level. What began with the free-market advocate Alan Greenspan in the nineties (stealthily) nurturing U.S. non-bank Credit expansion, has regressed to open global government manipulation of sovereign bond, corporate debt, equities and currency markets.

There are serious flaws in today’s New Age doctrine that ensure spectacular failure. Generally speaking, global policy is pro-Bubble – pro-Credit Bubble, pro-securities market Bubbles, pro-wealth redistribution and pro-global Bubble-induced financial and economic maladjustment. It is pro unsustainable divergence between inflating securities prices and deflating economic prospects.

Fundamentally, market-based Credit is unstable, with this era’s great experiment requiring progressive government intervention and manipulation. Providing robust incentives for leveraged speculation ensures mispriced Credit, loose Credit Availability and boom and bust dynamics. It also ensures an inflating pool of trend-following and performance-chasing finance. Incentivizing flows to the risk markets as opposed to savings only exacerbates the proclivity of markets toward destabilizing speculative excess. As we’ve witnessed over the years, mounting market distortions and associated fragilities have been met with only more aggressive policy measures. A breakdown in market pricing mechanisms is celebrated as a historic “bull market.”

Importantly, it has reached the point where the risks associated with a bursting global Bubble overshadow policy discussions and objectives. Policymakers now endeavor to completely repress market self-adjusting and correcting mechanisms (i.e. “quasi-Capitalism”). Bear markets and recessions have become completely unacceptable, as this historic Bubble’s “Terminal Phase” runs its regrettable course.

Doug's weekly Credit Bubble Bulletin appeared on his Internet site on Friday evening sometime and, as usual, I thank reader U.D for sending it our way.

View full GSD edition

Judge Andrew Napolitano: The State Is Spying On You Right Now. Where’s The Outrage?

Here is a short pop quiz: When Israeli Prime Minister Benjamin Netanyahu addressed Congress earlier this month about the parameters of the secret negotiations between the United States and Iran over nuclear weapons and economic sanctions, how did he know what the negotiators were considering? Israel is not a party to those negotiations, yet the prime minister presented them in detail.

When Hillary Clinton learned that a committee of the U.S. House of Representatives had subpoenaed her e-mails as secretary of state and she promptly destroyed half of them—about 33,000—how did she know she could get away with it? Destruction of evidence, particularly government records, constitutes the crime of obstruction of justice.

When Gen. Michael Hayden, the director of both the CIA and the NSA in the George W. Bush administration and the architect of the government’s massive suspicionless spying program, was recently publicly challenged to deny that the feds have the ability to turn on your computer, cellphone, or mobile device in your home and elsewhere, and use your own devices to spy on you, why did he remain silent? The audience at the venue where he was challenged rationally concluded that his silence was his consent.

The common themes here are government spying and lawlessness. We now know that the Israelis spied on Secretary of State John Kerry, and so Netanyahu knew of what he spoke. We know that the Clintons believe there is a set of laws for them and another for the rest of us, and so Mrs. Clinton could credibly believe that her deception and destruction would go unpunished.

This commentary appeared on the Paul Craig Roberts website on Friday sometime---and it's worth reading.

View full GSD edition

WikiLeaks Exposes Most Controversial Part of Obama-Led Trade Agreement

The leaked proposal, published on Wikileaks, comes from the ongoing secretive Trans-Pacific Partnership (TPP) deal negotiations and outlines the intent to grant multinational corporations with the opportunity to sue foreign governments if their laws and regulations interfere with claimed future profits.

The whistleblower organization, Wikileaks, published a 56-page draft chapter dated January 20 from the secretive negotiations over a deal that has become the cornerstone of Obama’s economic agenda. The chapter, entitled “Investment”, proposes empowering multinational corporations to sue foreign governments.

Under the agreement, corporations may challenge foreign government’s laws and regulations if they interfere with “distinct, reasonable investment-backed expectations”, and they can do so before tribunals under the World Bank or the United Nations. This process is known as Investor-State Dispute Settlement (ISDS), and while it has existed in the past, the large scope of the TPP has prompted some serious concerns.

TPP negotiations have been kept tightly under wraps, with only select officials reviewing the documents in secured reading rooms. The leaked chapter would mark the first disclosure of the accord to the public since an early version leaked in 2012. Opponents of the TPP have voiced concerns about the secrecy of the deal, saying it allows governments to push forward provisions disliked by their constituents. The Obama administration, along with other TPP opponents have argued that the secrecy is necessary for a smooth negotiation.

It's no accident that this is all being done in secret.  This must read news item put in an appearance on the sputniknews.com website at 10:13 p.m. Moscow time on their Friday evening, which was 2:13 p.m. in Washington.

View full GSD edition

Mark Carney: next interest rate move will be up, not down

Britain's record low inflation is unlikely to force the Bank of England to cut rates below their already rock-bottom levels, its governor has said, underscoring a fracturing of views between the top policymakers at Threadneedle Street.

Mark Carney said the Bank's next move in interest rates would be an increase rather than a cut, putting him at loggerheads with his chief economist, Andrew Haldane.

"We're still in a position where our message is... that the next move in interest rates is going to be up," Mr Carney said during a panel discussion at a Bundesbank conference in Frankfurt.

Mr Haldane surprised investors last week when he said a recent sharp slowdown in inflation meant the bank was as likely as not to cut rates - a view that had been previously rejected by Mr Carney.

This article appeared on The Telegraph's website at 3:50 p.m. GMT on their Friday afternoon---and it's the first contribution of the day from Roy Stephens.

View full GSD edition

Max Keiser: Financial Rock ‘n’ Roll

Max Keiser is outspoken to say the least.

He hosts the Keiser Report, his show for Russian English-language channel RT, alongside his wife and producer Stacy Herbert, and is known for his angry outbursts against those he calls the “banksters”.

He was a Wall Street stockbroker in the 1980s, an experience he often draws on to guide viewers through the otherwise impenetrable jargon of global finance.

Now, though, he is based in the heart of London, which he says is the centre of the world when it comes to financial misconduct.

This absolute must read interview with Max appeared on theepochtimes.com Internet site back on March 18---and for obvious reasons had to wait for today's column.  It's Max doing what he does best---telling it like it really is.  I thank reader Jules Mounteer for bringing it to our attention.

View full GSD edition

Brussels wants to end geo-blocking of online content

Tony Rooke, in an act of civil disobedience, refused to pay the mandatory £130 TV license fee claiming it violates Section 15 of the Terrorism Act. Rooke’s accusation was aimed at the BBC who reported the collapse of WTC 7 over 20 minutes before it actually fell, and the judge accepted Rooke’s argument. While it was not a public inquiry into 9/11, the recognition of the BBC’s actions on September 11th are considered a small victory, one that was never reported in the U.S.

“Today was an historic day for the 9/11 truth movement,” Peter Drew of AE911Truth UK told Digital Journal, “with over 100 members of the public attending, including numerous journalists from around the U.K. as well as from across other parts of Europe.”

Well, dear reader, it's been a well-known fact from the outset that this case is one of the many major monkey wrenches in the Fantasyland story surrounding the actual events of 9/11.  It falls into the absolute must read/watch category---and for obvious reasons it had to wait for my Saturday column.  The first reader through the door with it was Dan Lazicki.

View full GSD edition

'The Fourth Reich': What Some Europeans See When They Look at Germany

The European Commission has said it wants to abolish geo-blocking, the practice of limiting access to online services based on a user's location.

The EU’s internal market and geo-blocking “cannot coexist", the EU's commissioner for digital single market, Andrus Ansip, said Wednesday (25 March).

He listed a set of goals to feature in the digital strategy he will publish in May.  These include: “Better access for consumers and businesses to digital goods and services; Shaping the environment for digital networks and services to flourish; and Creating a European Digital Economy and Society with long-term growth potential”.

“Consumers and companies in Europe are digitally grounded. They cannot choose or move freely. In the 21st century, this is absurd,“ said the former prime minister of Estonia, one of the most digitally advanced countries in the world.

This interesting article showed up on the euobserver.com website on Wednesday---and is another story that had to wait for today's column.  This one is courtesy of Roy Stephens.

View full GSD edition

Greek Bank Deposits Plunge to 10-Year Low as E.U. Patience Frays

May 30, 1941 was the day when Manolis Glezos made a fool of Adolf Hitler. He and a friend snuck up to a flag pole on the Acropolis in Athens on which a gigantic swastika flag was flying. The Germans had raised the banner four weeks earlier when they occupied the country, but Glezos took down the hated flag and ripped it up. The deed turned both him and his friend into heroes.

Back then, Glezos was a resistance fighter. Today, the soon-to-be 93-year-old is a member of the European Parliament for the Greek governing party Syriza. Sitting in his Brussels office on the third floor of the Willy Brandt Building, he is telling the story of his fight against the Nazis of old and about his current fight against the Germans of today. Glezos' white hair is wild and unkempt, making him look like an aging Che Guevara; his wrinkled face carries the traces of a European century.

Initially, he fought against the Italian fascists, later he took up arms against the German Wehrmacht, as the country's Nazi-era military was known. He then did battle against the Greek military dictatorship. He was sent to prison frequently, spending a total of almost 12 years behind bars, time he spent writing poetry. When he was let out, he would rejoin the fight. "That era is still very alive in me," he says.

Glezos knows what it can mean when Germans strive for predominance in Europe and says that's what is happening again now. This time, though, it isn't soldiers who have a choke hold on Greece, he says, but business leaders and politicians. "German capital dominates Europe and it profits from the misery in Greece," Glezos says. "But we don't need your money."

In his eyes, the German present is directly connected to its horrible past, though he emphasizes that he doesn't mean the German people but the country's ruling classes. Germany for him is once again an aggressor today: "Its relationship with Greece is comparable to that between a tyrant and his slaves."

This longish essay appeared on the German website spiegel.de on Monday---and is the third article in a row that had to wait for Saturday's column.  It's worth reading if you have the interest---and it's the second offering in a row from Roy Stephens.  It now sports the above headline, but the original read "German Power in the Age of the Euro Crisis".

View full GSD edition

Ukraines's $3 billion debt to Russia puts mult-ibillion dollar IMF package at risk

Ukraine’s $3 billion debt to Russia could undermine the IMF’s four-year multibillion dollar bailout program. If the debt is considered official, it will breach the terms of providing financial assistance, said IMF spokesperson William Murray.

The Ukraine debt includes $3 billion in Eurobonds lent by Russia to the country’s previous government in December 2013. IMF rules say a bailout cannot be provided to a country if it defaulted on a loan from a state institution.

"We have a non-tolerance policy," William Murray told reporters at a news conference on Thursday, adding that Ukraine's debt to Russia should be considered state debt.

"If I'm not mistaken, the $3 billion Eurobond comes from the Russian sovereign wealth fund, so it's official debt," he said.

I posted a story on this particular issue in yesterday's column, but this one showed on the Russia Today Internet site at 10:22 a.m. Moscow time on their Friday morning.  It's worth skimming---and I thank Roy Stephens for sending it.

View full GSD edition

Russia supplies 300 million cubic meters of gas to Ukraine’s Donbas — Energy Minister

Russia has already supplied 300 mln cubic meters of natural gas to Ukraine’s Donbas region, Energy Minister Alexander Novak told reporters on Friday.

"Most likely it is slightly more than 300 million cubic meters", he said.

In late February, Naftogaz of Ukraine refused to supply gas to Donbas. Kiev said it was impossible because the gas transportation system delivering gas to the east of Ukraine had been destroyed.

Russia’s gas giant Gazprom agreed to discuss gas supplies to Donbas outside the trilateral gas talks between Russia, Ukraine and the E.U.

The above four paragraphs are all there is to this brief article that appeared on the tass.ru Internet site at 7:54 p.m. Moscow time on their Friday evening, which was 11:54 a.m. EDT in Washington.

View full GSD edition

John Batchelor Interviews Stephen F. Cohen: 24 March 2015

Well, its semi official, Minsk 2 is dead because Kiev has decided  that the Eastern territories have to surrender first to Kiev before they will carry through with the rest of the political rearrangement terms of this agreement. And, of course this is absurd.  Usually the vanquished, Kiev in this case, surrenders to the winner, which is clearly the Donbass rebels, and so Cohen understandably describes this period of relative calm as a pause to the next offensive. Cohen considers this political absurdity is direction from Washington interests. And with Washington's additional vandalism through NATO spokespersons and congressional support to send lethal weapons, Obama is being hard pressed to keep to his "give the Minsk 2 agreement a chance". Unfortunately, at present he is being very quiet about all this and one is inclined to suspect an element of disingenuousness (or even indifference) on the president's part. Cohen by now is even more convinced that there must be a regime change in Kiev in order for this terrible war to be resolved. And, of course, these events are "to sabotage Merkel and Minsk 2," and her efforts to resolve this with "no military solution". So far Washington is succeeding and Cohen believes that the United States and Russia are closer to war due to these latest events.

Meanwhile the IMF is beginning to send funds to the beleaguered regime - and Cohen points out that a 1/3 of it was from "private sources". This amounts to $40billion in total and is understood to be part of "war aid" to Kiev.

But Stephen Cohen is mildly encouraged that 48 members, 6% of Congress, opposed the bill to supply lethal aid to Kiev. There are also cracks showing in the politics of the oligarchs involved in Kiev's parliament. Purges of supporters of the previous governments are also starting. These are showing up in the form of 6 (and counting) "suicides" that so far involve the use of window exits of taller buildings; special mention is also made of one of the leading political competitors with his own "pocket army", one Ihor Kolomoiskii, was told to disarm his "troops" and there was almost an armed standoff with the government. That suggests that the government is breaking down through a process of squabbling fiefdoms. He has since been "fired" by Poroshenko as governor of a province. There is no rule of law in the government of Kiev is Cohen's very astute conclusion, and it should be to the shame of the United States that we support it.

But with Europe increasingly cool towards continuing this crisis and the trends of new relationships between Russia and the East, Cohen is increasingly seeing this process as a break down of Washington's power with the potential for the dissolution of NATO. Again, this broadcast excels in details of events that see the course of history changing in profound ways right before our eyes.

This 39:47 minute audio interview was posted on the John's website on Tuesday---and for length reasons had to wait for today's column.  I thank Larry Galearis for bringing it to my attention---and now to yours.  If you have the interest, it's definitely worth your time.

View full GSD edition

Turkey Devolves Into a Full Police State: Law Grants Unlimited Powers to Weaponized Police Force

While a source of much schadenfreude by its neighbors and casual onlookers, Turkey has become a glaring example of what happens to a formerly respectable nation as it devolves entirely into a banana republic with not only authoritarian overtones but a police state to boot. And earlier today, Turkey's conversion to a full blown police state was complete when, after weeks of heated debates and brawls in parliament, Turkey’s government passed a security package expanding police powers, along with an online surveillance law and a discretionary fund for President Recep Tayyip Erdogan to fund covert operations.

In other words, president Erdogan has just voted himself quasi-dictatorial powers with a private police force to defend him.

As Bloomberg details, the parliament voted to approve security laws that allow police to conduct searches and arrests without immediate court orders and use firearms against militants. The law separately empowered government-appointed governors to order police or paramilitary forces to conduct searches and detain suspects for up to 48 hours without immediate court orders, state-run Anadolu Agency said.

This Zero Hedge spin on a Bloomberg story put in an appearance on the ZH website at  8 a.m. EDT yesterday morning---and it's another contribution from reader M.A., for which I thank him.

View full GSD edition

With Yemen strikes, Saudis show growing independence from U.S.

Saudi Arabia kept some key details of its military action in Yemen from Washington until the last moment, U.S. officials said, as the kingdom takes a more assertive regional role to compensate for perceived U.S. disengagement.

The Middle East's top oil power told the United States weeks ago it was weighing action in Yemen but only informed Washington of the exact details just before Thursday's unprecedented air strikes against Iran-allied Houthi rebels, the officials said.

Although the Saudis spoke with top U.S. officials as they debated an air assault in support of embattled Yemeni President Abd-Rabbu Mansour Hadi, U.S. officials acknowledged gaps in their knowledge of the kingdom’s battle plans and objectives.

Asked when he was told by Saudi Arabia that it would take military action in Yemen, General Lloyd Austin, the head of the U.S. military’s Central Command, told a Senate hearing on Thursday he spoke with Saudi Arabia’s chief of defense "right before they took action."  He added that he couldn't assess the likelihood of the campaign succeeding because he didn't know the "specific goals and objectives."

This Reuters article, filed from Washington, was posted on their Internet site at 9:25 p.m. EDT on Thursday evening---and it's the third contribution of the day from Elliot Simon.

View full GSD edition

Justin Raimondo: Leave the Houthis Alone!

Saudi Arabia‘s U.S.-backed aggression against the sovereignty of Yemen is a textbook example of how local conflicts are internationalized – and become tripwires for regional wars and even global conflagrations.

Like Libya, Yemen is yet another Middle Eastern country that doesn’t really exist: it is actually at least two separate countries, perhaps three – the southern provinces, which are primarily Sunni, the northern tribes, who adhere mostly to the Zaydi form of Shi’ite Islam, and the area around Sa’na, the capital, one of the oldest continuously inhabited cities on earth, where all Yemen’s clashing cultural, political, and religious factions meet.

The north/south division dates back to the nineteenth century British colonization, when, in 1839, the British seized the port city of Aden and administered it as a subset of the Indian Viceroyalty. It became a major trading center after the opening of the Suez canal, and the Brits pushed outward, extending their influence throughout what had been a land perpetually divided between the Ottoman Empire and local imams, including the distinctive Zaydis in the north. In 1911, the Zaydis rose up against the British and their local collaborators, abolished the north/south division negotiated by the British Foreign Office, and established the Mutawakkilite Kingdom of Yemen under Imam Yahya. Yahya’s dream was to recreate the ancient Qasamid dynasty, founded in the seventeenth century: a "Greater Yemen" extending into what is today Saudi Arabia as well as the whole of modern Yemen.

This essay by Justin appeared on the antiwar.com Internet site on Friday sometime---and it's courtesy of Dan Lazicki.  I haven't read it yet, but it's on my 'to do' list for this weekend.

View full GSD edition

Lee Kuan Yew's Bad Prescription for India

Lee Kuan Yew, the founding father of Singapore who died this week at 91, had a lot to say about India. He never sugar-coated his remarks, nor did he resort to the many clichés used by thinkers both in the West and in India.

In 2000, Lee published "From Third World to First," an account of the rise of Singapore beginning in 1965. It contains a long section on India’s flaws, both as a civilization -- Lee believed the caste system was inimical to meritocracy, which is the foundation of economic development -- and as a new nation-state that he said couldn't transcend its native introversion and its (democratic) directionlessness.

Reading these pages is a bit like reading V.S. Naipaul on India, only from the viewpoint of a rigorously pragmatic, clear-sighted and technocratic statesman. Five Indian prime ministers across five decades -- Jawaharlal Nehru, Indira Gandhi, Morarji Desai, Rajiv Gandhi, Narasimha Rao -- are one after the other allowed one or two kind sentences for their idealism, good intentions and unpromising circumstances. Then their personal frailties and flaws in economic management, leadership and foreign policy are ruthlessly, and very persuasively, dissected.

This very interesting commentary put in an appearance on the bloomberg.com Internet site at 6 p.m. on Wednesday evening EDT---and I thank Dan Lazicki for sharing it with us.  It's another one of those articles that had to wait for my Saturday column.

View full GSD edition

China stocks may be in serious bubble

Some say that when the average “mom-and-pop” retail investors get back into the stock market, it could be time to get out. But what about when even teenagers start buying?

China has entered a new stock frenzy, like something out of America in the Roaring 20s or the dottiest days of the dot-com bubble, with trading volumes continuing to push to new record highs.

On Wednesday, combined trading on the Shanghai and Shenzhen markets hit 1.24 trillion yuan ($198 billion), the seventh straight session in which turnover surpassed the 1 trillion yuan mark. By comparison, the New York Stock Exchange typically saw $40 billion-$50 billion a day in trading during the first two months of this year.

The lure of flush times on the Shanghai market is sweeping in unlikely investors by the hundreds of thousands. This week, both the China Securities Daily and the Beijing Morning Post had dueling reports about recent college graduates and, yes, teenagers buying shares.

This news item appeared on the marketwatch.com Internet site at 11:45 p.m. EDT on Thursday evening---and I thank Roy Stephens for digging it up for us over at David Stockman's website.

View full GSD edition

That Ain't No Margin Debt: THIS Is Margin Debt

We find it amusing how many people try to read into the tea leaves when looking at the NYSE margin debt (especially since the real leverage long ago left the CNBC TV studio in downtown Manhattan, as explained before), when the real action is half way around the world. Because, in the immortal words of Crocodile Dundee, "That is not margin debt. This is margin debt."

The brief Zero Hedge story has an embedded chart showing the margin purchases on the Shanghai and Shenzhen stock exchanges---and they're over the moon.  The chart is worth the trip---and I thank Dan Lazicki for sending it to me on Thursday.  I didn't post it in yesterday's column, but it fits perfectly with the previous story on the bubble dynamics in China's equity markets.

View full GSD edition

Sprott Money Weekly Wrap Up With Eric Sprott

Listen to Eric Sprott share his thoughts on negative trends in the economy, economic ramifications of global geopolitical unrest, the movement in precious metals this week, and his opinion on the newly implemented electronically-based London Gold Fix.

This 10:27 minute audio interview with Eric was conducted by Geoff Rutherford on Friday---and posted on the sprottmoney.com Internet site yesterday.  It's worth your while.

View full GSD edition

Inquiry Launched into New Zealand Mass Surveillance

New Zealand’s spy agency watchdog is launching an investigation into the scope of the country’s secret surveillance operations following a series of reports from The Intercept and its partners.

On Thursday, Cheryl Gwyn, New Zealand’s inspector-general of intelligence and security, announced that she would be opening an inquiry after receiving complaints about spying being conducted in the South Pacific by eavesdropping agency Government Communications Security Bureau, or GCSB.

In a press release, Gwyn’s office said: “The complaints follow recent public allegations about GCSB activities. The complaints, and these public allegations, raise wider questions regarding the collection, retention and sharing of communications data.”

This month, The Intercept has shined a light on the GCSB’s surveillance with investigative reports produced in partnership with the New Zealand Herald, Herald on Sunday, and Sunday-Star-Times.

I knew that the Hobbits of the Shire wouldn't be pleased with what Saruman was doing in their midst---and if they're smart, they and the Ents, should make the trip to Isengard just outside Blenheim---and do what they have to do to the white domes of Orthanc.  When they're done, they can celebrate with a few cases of Oyster Bay Sauvignon Blanc.  This short article was posted on the firstlook.org Internet site on Thursday sometime---and it's the final offering of the day from Roy Stephens, for which I thank him.

View full GSD edition

Former BIS official who admitted gold price suppression comes out for free markets

Hinde Capital in London, in cooperation with the free-market advocates of the Cobden Centre, this week published the first part of an interview with former Bank for International Settlements official William R. White, who in a speech in June 2005 to a BIS conference confessed on behalf of the bank to the international central bank gold price suppression scheme.

White is now chairman of the Economic and Development Review Committee of the Organization for Economic Cooperation and Development, and in the Cobden Centre interview he expresses skepticism about "quantitative easing," contends that the biggest problem of the world financial system is excessive debt, argues that much of this debt will have to default and be written off, and laments that free markets are being impaired by central bank interest rate-suppression policies that are propping up uneconomic businesses.

Of course gold price suppression is a prerequisite of interest rate suppression and is just as antithetical to free markets, so it would have been nice if White was questioned about that, especially since his former employer, the BIS, remains the broker for surreptitious central bank interventions in the gold market.

This GATA release, that Chris Powell filed from the Philippines yesterday, has some very interesting embedded links---along with the link to the Hinde Capital interview.  This commentary is definitely worth your while.

View full GSD edition

Peak Gold? Goldman Calculates There Is Only 20 Years Of Gold Supply Left

Late last year, when looking at a Goldcorp slideshow, we noticed something surprising: the gold miner had forecast that 2015 would be the year when gold production would peak among the mining industry.

According to a report issued by Goldman's Eugene King looking at commodity scarcity, the chart below "shows that there are only 20 years of known mineable reserves of gold and diamonds."

Of course, this analysis is meaningless in a vacuum: if the "known reserves" of gold plunge in the coming decade, no matter how many gold futures and GLD short sales are conducted by the BIS, the price will have to go up, and it will go up high enough to where a new surge of gold miners will come online and find thousands of new tons of gold reserves around the globe.

Unless they don't, and Goldman is correct that "peak gold" may have arrived. This will be even more true if over the coming years the long overdue fiat economic panic finally washes over the globe, and a revulsion toward central bank policies forces a scramble into gold whose value (if not price since fiat currencies will be redundant) soars.

The answer is unclear, but what is certain is that like the price of oil over the past decade and until last fall when price discovery finally became somewhat credible, what happens in the physical realm has absolutely zero marginal impact on the price of commodity which has about 100 ounces in deliverable paper contracts for every ounce in underlying. It will be only after the gold price distortions via the derivative market are eliminated that such trivial price-formation forces as supply and demand are once again relevant.

Of course this 20-year projection goes out the window if the gold price rises many orders of magnitude higher than it is now, as marginal deposits will become major ore bodies overnight.  But as this Zero Hedge article from yesterday states, JPMorgan et al will have to release their iron grip in the COMEX futures market before anything else happens.  This article is definitely worth your while---and I thank Dan Lazicki for his final contribution to today's column.

View full GSD edition

Lawrence Williams: WGC cautions against common gold wisdoms

The market would seem to believe that there is a direct inverse relationship between dollar strength and the gold price and also, in the current environment of negative interest rates that any rise in these rates stimulated by the U.S. Federal Reserve or perhaps the ECB or elsewhere, will be gold price negative. Indeed any hint of these generally accepted maxims does indeed tend to move the gold market in something of a knee jerk reaction.

But, a new report out from the World Gold Council (WGC) authored by Juan Carlos Artigas, the WGC’s director for Investment Research, points out that these common gold wisdoms are not entirely accurate and that following the way the gold market has acted under these scenarios shows that the bland acceptance of these norms as fact rather misses out on gold’s real world performance.

Regarding the inverse relationship with the strength of the dollar – while this in essence is correct, Artigas points out that this relationship is a very asymmetric one – and indeed does not always occur at all – as witness some of the gold price’s upwards movement when the dollar has been particularly strong. Indeed the WGC research has shown that the gold price increases more when the dollar weakens than it falls when the dollar strengthens. To make the point the report notes that at the time it was prepared (March 20) the dollar index had risen by 20% since the beginning of 2014, yet gold had only fallen by 1.2% over the same period. But obviously such statistics are a little dangerous – if one chooses one’s dates carefully one could probably come up with some totally different ratios.

Of course this new report from the World Gold Council doesn't breath a word about the short positions held by the Big 8 trader in the COMEX futures market.  Their actions along---and nothing else---determines the gold price, along with the prices of the other three precious metals.  That's all there is, there ain't no more.  This commentary by Lawrie appeared on the mineweb.com Internet site at 4:37 p.m. GMT yesterday.

View full GSD edition

Lawrence Williams: Red rag to gold bulls – JPMorgan added to LBMA Gold Price banks

A visit today to the website of ICE Benchmark Administration (IBA), which now runs the new London gold benchmarking process on behalf of the LBMA, confirms there are now seven Direct Participants in the LBMA Gold Price with JP Morgan now joining Barclays, Goldman Sachs, HSBC, Scotiabank, SocGen, and UBS in the setting of the twice daily gold benchmark. Talk about ‘The Usual Suspects’!

If any bank selection could be guaranteed to inflame those within the gold bull community who preach gold price manipulation, it would be the addition of JP Morgan, following that of Goldman Sachs and UBS, over the original four members of the old London Gold Fixing panel. A cynic might suggest the LBMA and ICE might have made the selection of the participants to deliberately rile GATA and its supporters, as all the above banks are those widely reckoned by the gold price manipulation theorists to be controlling the gold price for their own ends and for those of some allied central banks. Manna for the conspiracy theorists!

And still there are no Chinese banks involved. Will there ever be? Until the benchmarking process participants are widened to include entities from outside the Western banking elite, the process will remain suspect in the eyes of those who feel that there are no level playing fields in the global financial markets – if indeed there ever were!

The above three paragraphs are all there is to this brief commentary that appeared on the mineweb.com Internet site at 4:58 p.m. GMT yesterday---and Lawrie's comments are spot on.  It's a must read.

View full GSD edition

Miners' gold forward sales surged 103 tonnes last year, most since 1999

The volume of gold sold forward by mining companies rose by 103 t last year, the biggest annual increase since 1999, an industry report showed on Friday.

That far outstrips an estimate given late last year of 42 t to 52 t, after Mexican gold and silver miner Fresnillo said it was hedging 47 tonnes of output over five years.

In their quarterly Global Hedge Book Analysis, Societe Generale and GFMS analysts at Thomson Reuters said the bulk of the rise in the global gold hedge book last year was driven by Fresnillo and Russia's Polyus Gold, which announced a major hedging deal in July.

"Of the growth in the book in 2014, the majority (85 t) came from these two companies. Together they now account for half of the outstanding global hedging," the report said.

This is much ado about nothing once again, dear reader, as these amounts are piddling compared to what they were almost 20 years ago.  It was a situation that I remember all too well---and so do the miners.  This Reuters gold-related news story appeared on the miningweekly.com Internet site yesterday---and I thank South African reader B.V. for digging it up for us.

View full GSD edition

When Will China Disclose Its True Official Gold Reserves and How Much Is It?

As most readers who are interested in gold will know, China’s official gold reserves are small in proportion to the size of their economy and their foreign exchange reserves. This disproportionate position has been difficult for China to escape from. Any slight move from their immense stock of U.S. dollars into gold could disrupt the gold market, and thus the U.S. dollar, spoiling the party for everybody.

China is forced to buy in secret. The latest update on the size of their official gold pile was in April 2009, when they disclosed to have 1,054 tonnes, up 454 tonnes from 600 tonnes, which they claimed to have since 2003. Common sense indicates the PBOC did not buy 454 tonnes in a few months; most likely they bought this amount in secret spread over six years (2003 – 2009). More common sense suggests they continued to buy in secret since 2009 and they hold at least twice the weight they currently claim.

Last week I reported it’s very likely the renminbi will be adopted into the SDR basket this year and before inclusion China will announce their true gold reserves. All arrows point in the same direction, IMF chief Lagarde stated: China’s yuan [renminbi] at some point would be incorporated in the International Monetary Fund’s Special Drawing Right (SDR) currency basket, IMF Managing Director Christine Lagarde said, …”It’s not a question of if, it’s a question of when,”

As I said in my column yesterday, I would be rather disappointed if they didn't have north of 5,000 tonnes in their reserves when they do announce.  This must read commentary by Koos Jansen, which includes his thoughts on the withdrawals from the Shanghai Gold Exchange for the week ending on March 20, was posted on the Singapore-based website bullionstar.com yesterday sometime.

View full GSD edition

Mar 27, 2015

Initial Jobless Claims Drop Back Below Dreaded "300k" Level

After last week's initial jobless claims drop - which nevertheless held the 4-wk average above 300k - this week saw the number drop once more. Against expectations of 290k, claims printed 282k, leaving the 4-week average at 297k, conveniently below the 300k mark. Continuing claims continues to flat line at an elevated level. This means that since the end of QE3, initial jobless claims are unchanged as the trend of improvement has clearly stalled.

This brief Zero Hedge article, with two excellent charts, showed up there at 8:37 a.m. EDT on Thursday morning---and today's first story is courtesy of Dan Lazicki.

View full GSD edition

Kansas Fed Plunges to 2-Year Lows, New Orders Crash: "Economy Not as Strong as Media Portrays"

How can it be? Services PMI was at 6-month highs. The Kansas City Fed Index tumbled to -4 in March (against expectations of +1) and was last below this level in Feb 2013. KC Fed has now missed for 6 of the last 8 months and the report is a disaster across the board. New orders plunged to -20 (2nd lowest print since Lehman), order backlogs imploded, average workweek collapsed to -17 (lowest since Lehman), and future capex expectations fell to a five-year low. As one respondent noted, "we do not see the economy as being as strong as a portrayed in the national media reports."

This Zero Hedge story is also chock full of charts that are worth your while.  It was posted on their Internet site at 11:17 a.m. EDT yesterday morning.  It's another offering from Dan L.

View full GSD edition

USA Today: The Emerging Portrait of Q1 Earnings Could Be Dismal

There might be a train wreck ahead — investors should look out for withering corporate profits when first-quarter results start pouring in, with some companies' profits expected to vanish entirely, according a USA Today review of S&P Capital IQ data.

In fact, at least 19 companies in the bellwether S&P 500 are expected to see their profits plummet by 90 percent or more, according to analyst projections.

Analysts' consensus projects that overall S&P 500 earnings will slump by almost 3 percent for the first quarter of this year. All 10 recessions since 1945 were preceded by downward trending growth in earnings per share during the previous 12-month period, said Sam Stovall, managing director of U.S. Equity Strategy at S&P Capital IQ’s Global Markets Intelligence group.

This business-related news story appeared on the newsmax.com Internet site at 6:00 a.m. EDT on Thursday morning---and I thank West Virginia reader Elliot Simon for sending it along.

View full GSD edition

S&P Tumbles Into Red Year-to-Date, Gold Goes Green

With Trannies now down almost 6% year-to-date, the S&P just fell back below the red-line for 2015, joining the Dow.  Small Caps and NASDAQ remain up 2% for now. Bonds, gold, and silver are back in the green for 2015.

Year-to-Date, stocks not happy...as PMs and bonds push back into green.

This is another short, 2-chart Zero Hedge story from yesterday morning EDT---and this one is courtesy of Dan Lazicki as well.  It's certainly worth a peek.

View full GSD edition

Dow Breaks Below Key "Bullard Bounce" Trend line

This is another tiny Zero Hedge article.  It's composed of two lines of text that accompany two charts---and they're definitely worth a look.  It's the third contribution from Dan Lazicki.

View full GSD edition

Jim Grant: Still in emergency mode after seven years

James Grant of Grant’s Interest Rate Observer discusses risk in the markets and the Fed.

This 4:41 minute video clip took place on the Fox Business website on Wednesday---and once again I thank Dan Lazicki for sharing it with us.

View full GSD edition

Three black crows' could spell doom for the market

Something highly unusual, and potentially quite bearish, has just happened to the stock market.  The S&P has closed on its absolute low three days in a row---and the pundits over at CNBS are fraught with worry.

But never fear, the President's Working Groups on Financial Markets---a.k.a. The Plunge Protection Team---will not allow things to get out of hand in the equity or bond markets to the downside, just like they're not prepared to let the precious metals get away to the upside.

This 2:36 minute video was posted on the CNBC website yesterday---and once again I thank Dan Lazicki for sharing it with us.

View full GSD edition

Manufacturing Dissent — Paul Craig Roberts

Professor Michel Chossudovsky is the author of many important books. His latest is The Globalization of War: America’s Long War Against Humanity. Chossudovsky shows that Washington has globalized war while the US president is presented as a global peace-maker, complete with the Nobel Peace Prize. Washington has military deployed in 150 countries, has the world divided up into six US military commands and has a global strike plan that includes space operations. Nuclear weapons are part of the global strike plan and have been elevated for use in a preemptive first strike, a dangerous departure from their Cold War role.

America’s militarization includes military armament for local police for use against the domestic population and military coercion of sovereign countries in behalf of US economic imperialism.

One consequence is the likelihood of nuclear war. Another consequence is the criminalization of US foreign policy. War crimes are the result. These are not the war crimes of individual rogue actors but war crimes institutionalized in established guidelines and procedures. “What distinguishes the Bush and Obama administrations,” Chossudovsky writes, “is that the concentration camps, targeted assassinations and torture chambers are now openly considered as legitimate forms of intervention, which sustain ‘the global war on terrorism’ and support the spread of ‘Western democracy.’”

Chossudovsky points out that the ability of US citizens to protest and resist the transformation of their country into a militarist police state is limited. Washington and the compliant foundations now fund the dissent movement in order to control it.

This absolute must read commentary by Paul showed up on his Internet site yesterday sometime---and I thank Roy Stephens for bringing it to our attention.

View full GSD edition

Bank of Canada says foreign buyers complicate housing market

A lack of data on foreign buyers scooping up property in Canada has made it tougher for the central bank to understand housing market and financial system risks, a senior bank of Canada official said on Wednesday.

Overseas home owners could respond more quickly to house price shocks, potentially exacerbating price moves, Deputy Governor Tim Lane said.

But he also noted any indebtedness they have would have less impact on the Canadian financial system assuming their money comes from abroad.

Foreign buying has helped pump up Canada's housing market, particularly in major centers like Toronto and Vancouver.

This Reuters article appeared on their Internet site at 5:40 p.m. EDT yesterday afternoon---and it's the second offering of the day from Elliot Simon.

View full GSD edition

Low rates causing 'huge problems' for Germany

"We have an interest rate environment that is causing huge problems for us in Germany," Wolfgang Schaeuble said at a banking event in Berlin.

However, he added that he was not criticising the European Central Bank (ECB), which needed to defend its inflation target.

"A low interest rate leads to a misallocation of resources with all the risks and side-effects that you see when bubbles are forming," he said, adding that there was too much central bank money and debt in the world.

Mr Schaeuble also said that bond buying by the European Central Bank meant countries had less incentive to reform.

This Reuters article found a home over at the telegraph.co.uk Internet site at 4:37 p.m. GMT yesterday afternoon, which was 12:37 p.m. in New York.  It's courtesy of South African reader B.V.---and it's worth reading.

View full GSD edition

One Month After Austria's Black Swan Shocker, the ECB Quietly Asks Banks to "Detail Their Exposure"

Nearly a month after the Hype Alpe Adria bad bank Heta Asset Resolution "unexpectedly" imploded under a house of non-GAAP and misreported cards, and which led to only the second European creditor bail-in after Cyprus in what until then was considered the safest European nation, unleashing a herd of black swans which will result in not only the insolvency of one of Austria's provinces, Carinthia, but a week ago led to its first foreign casualty, German Duesseldorfer Hypothekenbank AG which had to be bailed out by the German FDIC-equivalent, the ECB has finally realized it may have a major problem at hand.

So, doing what it does best, a month after the fact and long after the black swans have left the stable so to speak, Mario Draghi's ECB has asked Eurozone banks "to detail their exposure to Austria and provisions they plan to make after the country halted debt repayments by a "bad bank" winding down defunct lender Hypo Alpe Adria," financial sources told Reuters.

This Reuters article from yesterday gets the Zero Hedge treatment.  It was posted on their Internet site at 10:36 a.m. EDT yesterday---and it's another contribution from reader Dan L.  It's also worth reading.

View full GSD edition

Putin Is Becoming A "Vulture" Bond Investor in Ukraine

With Washington throwing its full faith and credit behind a new Ukrainian bond issue, it appears it’s time for Moscow to play spoiler to current debt restructuring talks between Kiev and its creditors. Russia is the country’s second-largest creditor after buying $3 billion in bonds back in the days of Viktor Yanukovych (who was once the victim of an attempted assassination by egg and who famously fled the country amid widespread protests last year) and now the Kremlin wants its money and isn’t likely to be amenable to any haircuts imposed on private creditors. Here’s more from Bloomberg:

Ukraine, after gaining a lifeline from the International Monetary Fund, included Russia’s bond among the 29 securities and enterprise loans it seeks to renegotiate with creditors before June. Finance Minister Natalie Jaresko has promised not to give any creditor special treatment. The revamp will include a reduction in the coupon, an extension in maturities as well as a cut in the face value, she said.

Russian Deputy Finance Minister Sergey Storchak said March 17 that the nation isn’t taking part in the debt negotiations because it’s an “official” creditor, not a private bondholder.

Should Russia decide to stick with a hardline stance on the negotiations (and it’s likely they will) it could not only embolden other prospective holdouts, but may indeed force Ukraine into a default.

This very interesting news item appeared on the Zero Hedge Internet site at 11:30 a.m. EDT yesterday morning---and I thank Dan Lazicki for digging it up for us.

View full GSD edition

The Central Banker Who Saved the Russian Economy From the Abyss

Panic reached the inner sanctum of the Russian central bank.

It was Dec. 16 -- the day Russian traders would later christen Black Tuesday -- and the ruble was in a free fall.

“Intervene! Intervene!” a central bank official shouted.

Governor Elvira Nabiullina watched the currency on her tablet screen react to her emergency rate increase. No, she said, not this time: Russia would no longer fight the market. Speculators needed a cold shower, she said.

That daring decision, related by two people with knowledge of the meeting, has begun to pay off for Nabiullina, 51, and her patron, President Vladimir Putin. Despite sanctions meant to punish Russia for its foray into Ukraine a year ago, the ruble has stabilized. Since Black Tuesday, when it plunged to a record low, the ruble has rebounded 19 percent against the dollar, the most among 24 emerging-market currencies.

As this Bloomberg article states shortly afterwards---"While her central bank is nominally independent, analysts agree Putin is ultimately in charge. Yet Nabiullina has emerged as a power in her own right, with a direct line to the president."  This very interesting article, filed from Moscow, appeared on their Internet site at 3 p.m. Denver time on Wednesday afternoon---and I thank Elliot Simon for his third offering of the day.

View full GSD edition

Iran, Russia demand immediate halt to Saudi-led intervention in Yemen

Iran and Russia have called on Saudi Arabia to halt airstrikes on Yemen as supporters of Yemen’s ruling Houthi militants stage demonstrations throughout the country, protesting against the Saudi-led military intervention.

Speaking to Iranian President Hassan Rouhani, Russia’s Vladimir Putin called for an "immediate cessation of military activities" in Yemen and increased efforts to find a peaceful solution to the crisis, the Kremlin said in a statement on Thursday.

Iranian Foreign Minister Mohammad Javad Zarif said that military operations against Yemen will only lead to further destabilization of the region, which has fallen under Houthi control after an onslaught of increased violence in recent months.

Iran is suspected of providing supplies and training to the Houthi rebels, but Tehran has publicly denied these claims.

This news item put in an appearance on the Russia Today Internet site at 5:34 p.m. Moscow time on their Thursday afternoon, which was 9:34 a.m. in Washington.  I thank Casey Research's own Bud Conrad for passing this story around yesterday.

View full GSD edition

U.S. Policies in Yemen, Ukraine Double Standard -- Lavrov

The U.S. approaches towards the ousted Yemeni President Abd Rabbuh Mansur Hadi and the former President of Ukraine Viktor Yanukovych represent double standards, Russian Foreign Minister Sergei Lavrov said Thursday.

"A much-employed cliche has to be used: obvious double standards, but we clearly did not want neither what is happening in Ukraine, nor what is happening in Yemen," Lavrov said at a press conference.

On Wednesday, Saudi Arabia-led coalition which includes Bahrain, Qatar and Egypt launched airstrikes against Houthi rebel positions in Yemen following a request by Hadi.  The United States is not participating in the military operation, but agreed to provide logistical and intelligence support.

It is necessary to renew the negotiations process in Yemen, as playing political games between Shiite and Sunni Muslims is too dangerous, Russian Foreign Minister said.

This story showed up on the sputniknews.com Internet site at 12 minutes to midnight Moscow time on their Thursday evening---and it's another article that's courtesy of Roy Stephens.

View full GSD edition

Saudi battle for Yemen exposes fragility of global oil supply

The long-simmering struggle between Saudi Arabia and Iran for Mid-East supremacy has escalated to a dangerous new level as the two sides fight for control of Yemen, reminding markets that the epicentre of global oil supply remains a powder keg.

Brent oil prices spiked 6pc to $58 a barrel after a Saudi-led coalition of ten Sunni Muslim states mobilized 150,000 troops and launched air strikes against the Iranian-backed Houthi militias in Yemen, prompting a furious riposte from Tehran.

Analysts expect crude prices to command a new “geo-political premium” as it becomes clear that Saudi Arabia has lost control over the Yemen peninsular and faces a failed state on its 1,800 km southern border, where Al Qaeda can operate with near impunity.

Over 3.8m barrels a day (b/d) pass through the 18-mile Bab el-Mandeb Strait off Yemen, one of the world's key choke points for crude oil supply. While there is little likelihood of disruption to tanker traffic, Saudi Arabia is increasingly threatened by Shiite or Jihadi enemies of different kinds.

The Ambrose Evans-Pritchard offering turned up on the telegraph.co.uk Internet site at 8:41 p.m. GMT last night, which was 4:41 p.m. EDT.  Once again I thank Roy Stephens for sending it our way.  It's certainly worth reading, but it's hard to keep all the waring factions straight as you read on.  A printed program would be nice.

View full GSD edition

China wants to compel U.S. to engage it as an equal partner in AIIB

The AIIB Charter is still under discussion. The media report that China is not seeking a veto in the decision-making comes as a pleasant surprise.

Equally, China is actively consulting other founding members (who now include U.K., Germany, France, Italy, etc). These would suggest that Beijing has a much bigger game plan of scattering the U.S.’ containment strategy. Clearly, the Trans-Pacific Partnership free-trade deal is already looking more absurd if China were to be kept out of it. The point is, AIIB gives financial underpinning for the ‘Belt and Road’ initiative, which now the European countries and Russia have embraced, as they expect much business spin-off.

China has said that its Silk Road projects are not to be confused as a latter-day Marshal Plan for developing countries, and that, on the contrary, the projects will be run on commercial terms. Which opens up enormous opportunities for participation by western companies. In geopolitical terms, therefore, China hopes that the ‘win-win’ spirit that permeates the AIIB and ‘Belt and Road’ will render ineffectual the American attempts to hem it in on the world stage and compel Washington to revisit a ‘new type of relations’ with China.

This short commentary by career Indian diplomat M.K. Bhadrakumar appeared on the Asia Times website yesterday---and it's a must read.  I thank reader M.A for finding it for us.

View full GSD edition

Gold market manipulation raised by Euronews broadcast

Bullion Star market analyst and GATA consultant Koos Jansen calls attention to a segment of the "Business Middle East" program on the French-based Euronews television network that this week asked whether gold market manipulation would diminish under the new gold price-fixing mechanism in London. Looks like gold market manipulation can get into the mainstream financial news media ... at least in Arabic.

The video clip has an English voice-over translation, so you can follow along. This news item was embedded in an article that Koos Jansen posted on the Singapore website bullionstar.com yesterday.  I found it in a GATA release---and I thank Chris Powell for the above paragraph of introduction.

View full GSD edition

China should boost gold reserves to 5 percent, says World Gold Council

China should increase its gold holdings to around 5 percent of its total foreign exchange reserves to help diversify currency risks, the World Gold Council (WGC) said.

China currently holds about 1.6 percent of its foreign exchange reserves in gold, which is relatively low compared with developed countries and some developing countries, WGC China managing director Roland Wang said.

"The ideal amount should be at least 5 percent of its total forex reserves," Wang told Reuters in an interview in Hong Kong.

China's holdings as a percentage of total reserves in Q4 2014 compare with 2.4 percent for Mexico, 5.7 percent for Australia, 6.7 percent for India and 12.1 percent for Russia, according to WGC figures.

Of course we know what the World Gold Council's "figures" are worth, don't we dear reader?  I would guess that China holds at least 5 percent already, if not more---and probably much more.  They'll let the world know the exact amount when it suits them.  This Reuters article, filed from Hong Kong, showed up on their website at 2:19 a.m. EDT on Thursday morning---and I found it on the Sharps Pixley Internet site.  Most of the article is the usual main stream media bulls hit, so be warned of that fact if you decide to read it.

View full GSD edition

Gold market manipulation is 'too inflammatory' to be debated at Hong Kong conference

Yesterday's concentration on gold at the spectacular Mines and Money Hong Kong conference may have inadvertently proved GATA's longstanding contention that gold market manipulation simply can't be discussed in polite company almost anywhere in the world.

For at the outset of a panel discussion described as a debate about the direction of the gold price, its moderator, Rod Whyte, a longtime gold advocate and member of the Board of Directors of Australia-based business information provider Aspermont Ltd., announced that the panelists had agreed that gold market manipulation would not be discussed because the topic is "too inflammatory."

Since Whyte has expressed support for GATA at other venues, the calculated avoidance of the manipulation issue would seem to have been someone else's idea. In any case the panel included two members who could not have been expected to want to discuss the issue: Philip Klapwijk, formerly an analyst for Gold Fields Mineral Services, now managing director of Precious Metals Insights Ltd. in Hong Kong, and Albert Cheng, Far East managing director for the World Gold Council.

While Klapwijk predicted that the price of gold will fall substantially, predictions for the gold price are of no particular concern to GATA. We recognize that as long as the futures markets are operating, central banks can drive the price down to zero or up to infinity.

This commentary by Chris Powell was posted on the gata.org Internet at 6:51 p.m. Hong Kong time on their Thursday evening---and it's a must read.

View full GSD edition

Mar 26, 2015

Durable Goods Orders Drop And Miss In Worst Run Since Lehman

For the 3rd of the last 4 months, Durable Goods Orders fell and missed expectations (the worst run since Lehman). A 1.4% drop (against expectations of a 0.2% rise) is made worse by downward revisions of the last month's modest bounce. Across the board the numbers are a disaster - Ex-Trans fell 0.4%, Ex-defense fell 1%, Capital Goods Shipments fell 1.4% with capital goods ex-air dropping a stunning 7.6% YoY.

  • *U.S. FEBRUARY DURABLES ORDERS FALL 1.4%; EX-TRANS. DROP 0.4% (both big misses)
  • *FEB. NON-DEFENSE CAPITAL GOODS ORDERS EX-AIRCRAFT DROP 1.4% (big miss)
  • *JANUARY DURABLE GOODS ORDERS RISE 2%, REVISED FROM 2.8% GAIN (major downward revision)
  • *U.S. FEBRUARY DURABLE GOODS ORDERS EX-DEFENSE DECREASE 1% (big miss)
  • *DURABLE GOODS INVENTORIES IN U.S. INCREASED 0.3% IN FEBRUARY

New orders fell for Computer products, fabricated metals, machinery, transportation, motor vehicle, and a dramatic plunge in non-defense aircraft new orders and even larger (33.1%) collapse in defense aircraft orders.

This news item appeared on the Zero Hedge website at 8:37 a.m. EDT on Wednesday morning---and today's first story is courtesy of reader M.A.

View full GSD edition

Dow tumbles 292 points as economy shows cracks

Wall Street is no longer cheering bad economic news.

The Dow dropped 292 points and the S&P 500 declined almost 1.5% after the latest in a long line of alarming economic reports.  The tech-heavy NASDAQ tumbled over 2.3% -- its biggest drop in nearly a year -- as investors worry that biotechs may be overvalued.

For weeks the stock market rallied because investors saw every economic speed bump as an indication the Federal Reserve would keep interest rates extremely low for longer and longer.

"You're at a point now where you can no longer say bad news is good news. That's not working anymore. You've got to show some growth here," said Joe Saluzzi, co-head of trading at Themis Trading.

This article showed up on the money.cnn.com Internet site at 5:05 p.m. EDT yesterday---and I found it in this morning's edition of the King Report.

View full GSD edition

Price of Ground Beef Hits Record in February: $4.238 Per Pound

The average price of a pound of ground beef climbed to another record high in February, hitting $4.238 per pound, according to data released today by the Bureau of Labor Statistics (BLS).

In August 2014, the average price for a pound of all types of ground beef topped $4 for the first time, hitting $4.013, according to the BLS.

In September, the average price jumped to $4.096 per pound; in October, the average price climbed to $4.154 per pound; and in November, the average price climbed to $4.201 per pound.

This article was posted on the cnsnews.com Internet site on Tuesday morning EDT---and it's the second offering of the day from reader M.A.

View full GSD edition

SEC proposes forcing high-frequency trading firms to register

The Securities and Exchange Commission on Wednesday voted to propose a rule that would force high-speed trading firms to register. Such high-speed trading firms, when they conduct business only for their own accounts, are currently exempt from registration with the Financial Industry Regulatory Authority. The rule that allows this exemption hasn't been substantively amended since 1983, the SEC says. The Michael Lewis book "Flash Boys" has brought more scrutiny on high-frequency trading.

This single paragraph story appeared on the marketwatch.com Internet site at 11:02 a.m. EDT yesterday---and I thank Brad Robertson for sending it.

View full GSD edition

Russia’s Lavrov compliments Obama

Russia has chosen to sidestep the provocative resolution passed with an overwhelming majority of 348 to 48 by the U.S. Congress on Monday urging President Barack Obama to send lethal weapons to Ukraine. Of course, Obama himself would ignore it.

However, the Russian assessment rests on more fundamental considerations. In a television interview in Moscow last week, Foreign Minister Sergey Lavrov was optimistic that Obama is unlikely to decide on supplying lethal weapons to Ukraine. This is what he said:

“So far, the administration of US President Barack Obama has opposed supplying lethal weapons to Ukraine. They are proceeding from considerations rooted in their overwhelming desire for a political solution, and also from purely pragmatic reasons. They are aware that this could lead to a grave military situation. And the most important thing is the European Union doesn’t want it either. It is not taking its cues from a small, aggressive and noisy group of its member countries that couldn’t care less and are eager to endlessly blame Russia for all the sins in the world, to preserve the sanctions against our country, and so on. As things stand now, a change in the E.U. position seems entirely unlikely to me.” [Emphasis added.]

The friendly tenor of Lavrov remarks — as friendly toward Obama as circumstances would permit a Russian foreign minister at the moment — would suggest that there might have been Russian-American cogitations on this topic and Lavrov would have spoken in the light of recent exchanges with U.S. Secretary of State John Kerry. Most certainly, an overall lowering of the U.S.’ anti-Russia rhetoric on Ukraine is palpable in the recent week or two.

This commentary by Indian career diplomat M.K. Bhadrakumar appeared on the Asia Times website yesterday---and it's the third story of the day from reader M.A.  It's certainly worth reading.

View full GSD edition

Obama Refuses to Meet With NATO Secretary General in Washington

NATO’s new Secretary General is in Washington this week, but despite repeated requests, has been refused a meeting at the White House. Could this be another indication of rising tension between President Obama and European leaders over the proposed EU army?

Nearly every NATO country has hosted the organization’s new head, Secretary General Jens Stoltenberg, since he took office in October. It’s part of a long tradition which has, until now, been enthusiastically followed by US presidents as a way to illustrate commitment to one of the country’s strongest treaty obligations.

"The Bush administration held a firm line that if the NATO secretary general came to town, he would be seen by the president…so as not to diminish his stature or authority," Kurt Volker, former US representative to NATO, told Bloomberg.

This is a big "up yours" to NATO's plans for the Ukraine.  This very interesting news item was posted on the sputniknews.com Internet site at 7:21 p.m. Moscow time on their Wednesday evening, which was 11:21 a.m. in Washington.  It's the first contribution of the day from Roy Stephens.

View full GSD edition

Alberta to bleed 31,800 jobs by end of year in oil price carnage

Alberta, the Canadian province holding the world’s third-largest oil reserves, expects 31,800 jobs to be lost for the remainder of the year as a crude price crash forces producers to cut costs.

Even with the job losses, overall employment will rise 1% in 2015 because of gains carried over from December, the provincial finance ministry said Tuesday in a statement to reporters in Calgary. That compares with a 2.2% increase in employment last year. It would take a loss of 80,000 jobs before year-end to prevent employment from growing, the government said.

Suncor Energy Inc., Cenovus Energy Inc. and other oil producers have already shed thousands of jobs this year as they cut spending on new projects. The energy industry accounts for about a quarter of Alberta’s economy, making the province the most reliant on crude in Canada, and previously fueling a boom that saw real estate prices and the number of millionaires in Calgary surge.

This short Bloomberg news item found a home on the financialpost.com Internet site on Tuesday---and it's the second offering of the day from Brad Robertson.

View full GSD edition

Russian Shipbuilder to Sue German Engine Supplier

Russia’s United Shipbuilding Corporation (USC) is preparing to sue Germany-based company MTU for its failure to supply engines for Russian corvettes, Ekho Moskvy radio station reported on Tuesday, citing USC President Alexei Rakhmanov.

MTU refused to supply the power units under a valid €24 million contract, Rakhmanov said.

“As if it wasn’t enough to keep the engines, they also tried to take us to court to avoid returning our advance payment,” he added.

This short article, filed from Moscow, appeared on the russia-insider.com website late on Tuesday Moscow time.

View full GSD edition

Europe blocks desperate Greek attempt to stay afloat

The Greek government will not receive €1.2bn (£883m) in European rescue funds after officials ruled the Leftist government had no legal claims on the cash.

Athens requested the return of money it said was erroneously handed to creditors from Greece's own bank recapitalisation fund, the Hellenic Financial Stability Facility (HFSF).

The transfer was originally arranged by the previous Greek administration.

But eurozone officials have blocked the claim, saying it is "legally impossible" transfer the money back to the debt-stricken country.

This news item appeared on the telegraph.co.uk Internet site at 10:00 p.m. GMT in London last evening---and it's another news item I found embedded in yesterday's edition of the King Report.

View full GSD edition

The Political Perils of a Ukraine Default

For the last 10 days, Ukrainian Finance Minister Natalie Jaresko has been visiting private creditors in Europe and the U.S. to explain why they should help her create a "new Ukraine," by agreeing to write off some of its debt. Back home, meanwhile, an oligarch with a private army was busy occupying two state energy companies in a style decidedly reminiscent of the old Ukraine.

The contrast is no criticism of Jaresko, an American-Ukrainian from Chicago who seems committed to the economic reform Ukraine needs. Indeed, the attempt by Igor Kolomoisky, a billionaire businessman and regional governor, to keep control of two state energy companies is grist for the pitch she’s been making to private holders of Ukraine’s sovereign debt.

Jaresko says they'll never get a better price for their bonds than now, because there’s a calm amid the Ukrainian storm. There's something resembling a cease-fire in eastern Ukraine; the currency is stable(ish); there’s a government committed to reform under the International Monetary Fund’s $40 billion loan program; and that government has support for that in parliament.

Her list of shocks that could end this lull is longer and all too plausible -- especially if the country's creditors don't help out before May, potentially forcing the IMF to withdraw its program and force a disorderly default.

This rather short commentary was posted on the bloomberg.com Internet site at 2:30 p.m. EDT on Tuesday afternoon---and I thank South African reader B.V.  It's worth your time.

View full GSD edition

Moody’s downgrades Ukraine heralding imminent default

International rating agency Moody's has downgraded the long-term issuer rating of Ukraine to the second lowest Ca grade from Caa3, leaving the outlook negative and a high possibility of the country’s imminent default.

“Although negotiations over the specific details of the restructuring are only now getting underway, Moody's believes that the likelihood of a distressed exchange, and hence a default on government debt taking place, is virtually one hundred percent,” Moody’s said in a news release Tuesday.

Another reason for downgrading Ukraine’s rating is that foreign private lenders are expected to incur substantial losses due to the government's plan of restructuring the bonds it has issued or guaranteed, the agency said.

The negative outlook reflects the agency’s expectation that the level of Ukrainian external debt will remain very high, despite plans to restructure the debt and carry out reforms.

This short article appeared on the Russia Today website at 10:22 a.m. Moscow time on their Wednesday morning---and I thank Roy Stephens for sending it our way.

View full GSD edition

'A revolution is impossible in Belarus'

The political year for the Belarusian opposition begins today, on Freedom Day, with a state-sanctioned rally.

The day, which marks the foundation of the Belarusian People’s Republic in 1918, used to bring thousands to the streets of Minsk to oppose the government of Alexander Lukashenko – who has been in power since 1994.

Not anymore. The political opposition is suffering from years of exclusion from public sphere; they have not held a seat in parliament since 1996, they are virtually ignored by state-affiliated media and the government have restricted their right to protest.

The appetite for a revolution has also been quelled by events in neighbouring Ukraine. Belarusians are cautious. The risk of the state collapse, civil strife and Russian interference seems too high. The west, particularly the US, take the same line. Preserving Belarusian independence, not democratisation, has become the highest priority.

This short, but very interesting essay appeared on theguardian.com website at 1:15 p.m. GMT on Wednesday afternoon, which was 9:15 a.m. in New York---and it's the second offering of the day from reader B.V.  I'm not sure what to make of it, but I am curious as to the reason it's appearing at this juncture.

View full GSD edition

Saudi Arabia moves heavy arms to border with chaos-stricken Yemen

Saudi Arabia is deploying a significant task force to the border with neighboring Yemen, where Houthi Shiite rebels allegedly forced the president to leave the country. President Hadi has been asking the U.N. to approve the use of foreign forces in Yemen.

The situation in Yemen remains murky, with Houthi militants claiming capture of the southern seaport of Aden, President Abd-Rabbu Mansour Hadi’s stronghold. The fighters say the city of Aden is now under their control and they're arresting the president's supporters there.

The rebels claim Hadi has fled the country, and announced a 20 million riyal ($100,000) reward for Hadi's capture, Lebanese-based Al-Manar TV reported, citing the rebels' representatives. While two of the president's aides have said he remains in Aden and has no intention of leaving the country, later reports claim he has left Yemen.

Yemen's president has left the country on a boat from Aden, officials told AP.  Hadi is now traveling by sea to the neighboring country of Djibouti, Yemen's former president Ali Abdullah Saleh's secretary told RIA Novosti.

This longish, but worthwhile news item appeared on the Russia Today Internet site at 10:31 a.m. Moscow time on their Wednesday morning, which was 2:31 a.m. EDT in Washington.  I thank reader M.A. for digging it up for us.

View full GSD edition

Saudi Arabia launches air attacks in Yemen

Saudi Arabia launched airstrikes early Thursday in neighboring Yemen, heading a coalition of Arab nations in an effort to dislodge Houthi rebels sweeping through that country.

The strikes were a startling turn of events that came as the Houthis, in control of Yemen’s capital for months, barreled south toward the coastal city of Aden, seizing an air base along the way that was evacuated by U.S. Special Operations forces­ last week.

President Abed Rabbo Mansour Hadi, who had taken refuge in Aden after fleeing Sanaa, the capital, was said to have escaped. His whereabouts were unknown.

The military operation was announced Wednesday evening in Washington by Saudi Ambassador Adel al-Jubeir, who said it would last until Yemen’s “legitimate government” was restored.

This news story put in an appearance on The Washington Post website at 10:20 p.m. EDT last night---and it's another article I lifted from this morning's edition of the King Report.

View full GSD edition

Chinese demand for Russian oil holds steady

Demand for Russian crude oil in the Chinese economy is expected to hold steady, despite economic faltering in both countries, a Chinese trader said Wednesday.

Chinese officials are describing a "new normal" in an economy slowing from a long period of double-digit growth. For Russia, sanctions pressure in response to crises in Ukraine and the decline in crude oil prices is pushing the country toward recession.

Chen Bo, head of the oil trading subsidiary of China Petroleum & Chemical Corp., said from a bilateral energy forum in Beijing both countries would remain strong energy partners.

This UPI story, filed from Beijing, appeared on their Internet site at 6:58 a.m. EDT on Wednesday morning---and I thank Roy for his final offering in today's column.

View full GSD edition

Ambrose Evans-Pritchard: U.S. risks epic blunder by treating China as an economic enemy

The U.S. Treasury's attempt to cripple the Asian Infrastructure Investment Bank before it gets off the ground is clearly intended to head off China's ascendancy as a rival financial superpower, whatever the faux-pieties from Washington about standards of "governance."

Such a policy is misguided at every level, evidence of what can go wrong when a lame-duck president defers to posturing amateurs in Congress on delicate matters of global geostrategy.

Washington has enraged Britain by trying to browbeat Downing Street into boycotting the project. It has forced allies and friendly countries across the Far East to make a fatal choice between the US and China that none wished to make, and has ended up losing almost everybody. Germany, France, and Italy are joining. Australia and South Korea may follow soon.

Ambrose carves the U.S. a new one, which is a sure sign that they've really stepped in it this time, which is precisely what they've done.  There's also no doubt in my mind that he was given the green light to write it, as he would never have been allowed to be this vitriolic without approval from above. This absolute must read commentary appeared on The Telegraph's website at 8:37 p.m. GMT yesterday evening in London---and I found it in a GATA release that Chris Powell filed from Hong Kong on their Thursday afternoon.

View full GSD edition

Lawrence Williams: SocGen’s ultra bearish gold and silver outlook

Analysts at the French Bank Société Générale (SocGen) in their latest research report have forecast that the gold price, having given away all its early year gains, was headed sharply lower, as it saw the dollar continue its gain in strength. They thus expected the bear market in gold to continue further and saw the price as falling to average only $925 an ounce between 2016 and 2019. The timing of this report was perhaps unfortunate in that the forecast for a virtually immediate downturn in gold, together with dollar strength, predated the events of the past few days, which has seen the reverse occur. Gold bulls will be fervently hoping that the bank’s analysts are equally incorrect in their forecast of gold’s longer-term prospects.

It’s not that the SocGen predictions couldn’t happen. Anything is possible with what we see as a gold price dominated by the futures markets and thus by the financial elite (which includes SocGen).

However the more we look at physical gold flows, and the rise in Asian-located precious metals exchange participation and volumes, we just feel that the current dominance of New York and London in gold and silver price setting could be drawing to a close. It would be replaced by pricing on the new Asian precious metals exchanges where there will likely be a different ultimate agenda. Whether that will involve allowing precious metals prices to rise, and rise fast, is anyone’s guess, but the current West to East physical gold flows suggest that this could well be in the cards.

This commentary by Lawrie is definitely worth reading---and it appeared on the mineweb.com Internet site at 12:24 p.m. GMT in London Wednesday afternoon.  I thank Nick Laird for bringing it to our attention.  Perma-gold bear Jeff Christian over at CPM Group was also dumping on the "ancient metal of kings".  His comments appeared in an article on the Bloomberg website on Tuesday afternoon bearing the headline "Gold Prices Seen Declining by CPM for Third Straight Year".  I found this item on the Sharps Pixley website in the wee hours of this morning.

View full GSD edition

HSBC 'cautiously optimistic' of gold price outlook in 2015

HSBC is "cautiously optimistic" of the gold price outlook for 2015, predicting a trading range of $1,120/oz-$1,305/oz with an average price of $1,234/oz, the bank said late Tuesday, March 24.

"The possibility that deflationary pressures could bring on negative rates in some economies helps reaffirm our cautiously optimistic view on gold," head analyst James Steel said.

However, in Steel's view gold prices are not "entirely hostage" to monetary developments.

"The recent price slump below $1,150/oz may be encouraging greater demand from price sensitive emerging market buyers, notably, but not exclusively, in India and China," Steel said.

Blah, blah, blah.   As you already know dear reader, the price of gold, along with the other three precious metals, are set by JPMorgan et al in the COMEX futures market irrespective of supply and demand fundamentals---or anything else for that matter---and what they decide, or are instructed to do, determines prices---end of story.  But these so-called "analysts" are oblivious, as their jobs depend on them not seeing this.  This gold-related news item appeared on the platts.com Internet site at 5:49 a.m. EDT yesterday morning---and it's another article I found on the Sharps Pixley website this morning.

View full GSD edition

Koos Jansen: Turkey's mint sometimes products more gold coins than U.S. mint

The Turkish mint gets little attention, Bullion Star market analyst and GATA consultant Koos Jansen wrote earlier today, but it is among the biggest in the world and in some recent years has produced more gold coins than the U.S. mint.

Jansen's report is headlined "The Largest Gold Mints in the World"---and it was posted on the bullionstar.com Internet site early Thursday morning Singapore time.  I thank Chris Powell for writing the above paragraph of introduction.

View full GSD edition

Mar 25, 2015

Consumer Prices Rise Most Since May 2014, Led By Gas Prices and Shelter Costs

Following the first YoY deflation since 2009 in January, February's CPI YoY data managed to scrape its way back to unchanged (very modestly better than the 0.1% drop expected). Consumer prices rose 0.2% MoM - the most since May 2014 with gas prices up MoM for the first time since June. So what is the narrative now: if tumbling gas prices didn't get consumers to spend, rising gas costs will? Ex food and energy, prices rose 0.2% MoM (slightly hotter than the 0.1% rise expected) led by the shelter index (which increased 0.2 percent) accounting for about two-thirds of the monthly increase. The rent continues to be too damn high for most, and finally the BLS is starting to realize this.

MoM, Consumer prices have jumped from the worst drop since Lehman to the biggest jump since May 2014.

This economic news item appeared on the Zero Hedge website at 8:40 a.m. EDT on Tuesday morning---and today's first story is courtesy of reader M.A.

View full GSD edition

How Cold Was It This Winter? So Cold That New Home Sales Hit a 7 Year Record!

For a minute there I thought I was reading the National Enquirer. But the Journal was not alone. All the major media outlets were reveling over the news. The Journal went on to say “New-home sales rose to the highest level in seven years in February, a sign of strong demand that could help boost the broader U.S. housing market.”

That’s the ticket! Strong demand! Housing is back, America! Low pay, unqualified borrowers are back, and we’re selling over a half million houses annually!

Behind that headline, a bump in southerly migration joined with the usual random noise in February in other regions to send the number reported by the back slapping, self-congratulatory, Washington-Wall Street media echo chamber, to da moon.

As usual, they were annualizing a monthly, seasonally adjusted, abstract impressionist interpretation of loosely estimated reality. In other words they multiplied the seasonal adjustment error plus the huge sampling error that is a feature of the first release of this data, times 12. To its credit, the WSJ did point out in a later paragraph that “February’s advance estimate came with a margin of error of plus or minus 15.2 percentage points.” 15.2%! Are you kidding me! Why are we even discussing this number?

This is what passes for news in the main stream media these days.  This commentary by Lee Adler appeared on David Stockman's website yesterday sometime---and I thank Roy Stephens for his his first contribution of the day.

View full GSD edition

The Verdict Is In, and America's 401(k) Accounts Are a Crashing Failure

For millions of Americans, the 401(k) plan is a miserable failure — it simply is not shielding enough people from financial struggles in their retirements, according to a CNBC analysis.

The Employee Benefit Research Institute estimates the median amount in U.S. 401(k) accounts is a paltry $18,433 and almost 40 percent of workers have less than $10,000 in those instruments.

"In America, when we had disability and defined benefit plans, you actually had an equality of retirement period. Now the rich can retire and workers have to work until they die," Teresa Ghilarducci, a labor economist at the New School for Social Research, told CNBC.

The business network said millions of Americans approaching retirement are exiting the workforce with savings that "do not even approach what they will need" for even just healthcare.

It you are an American citizen with a 401[k] plan, this is worth reading.  It appeared on the newsmax.com Internet site at 9:00 a.m. EDT on Tuesday---and it's courtesy of West Virginia reader Elliot Simon.

View full GSD edition

Mike Maloney: The Day the Internet Died

"February 26, 2015. That was the day that freedom of the internet died." Watch Michael Maloney's latest video update to hear his thoughts on the recent ruling on Net Neutrality.

"We're adopting a solution that won't work to a problem that doesn't exist using legal authority that we don't have." - Ajit Pai

This brief 2:31 minute video from Mike appeared on the youtube.com Internet site yesterday---and it's worth your time.

View full GSD edition

Canada's Biggest Oil Casualty to Date: Calgary's Nexen Shutters Oil Trading Desk

Last December, traditionally perma-bullish energy trader Andy Hall shocked the world when he became the first casualty of the oil crash after Phibro, his 113 year old employer then owned by Occidental Petroleum after its sale by Citigroup, would liquidate in the US after it failed to buy a buyer. He wouldn't be the last. Overnight, Nexen Energy, a wholly owned subsidiary of China's CNOOC Ltd, reported it too would close its crude oil trading division following a round of job cuts announced last week, four market sources said on Monday.

It appears that unlike money-losing shale producers, who still have some balance sheet capacity to eek out funding for a few more weeks/months of operations and product dumping (which sends prices of oil lower not higher which is what those same producers need), oil traders who largely are self-funded no longer have that luxury, and as a result of the failure of oil to bounce, have no choice but to fold it in.

From ReutersThe Calgary-based company, which was acquired by state-controlled CNOOC in 2013 for $15.1 billion, cut 400 jobs last week in North America and the United Kingdom in response to plunging global oil prices.

Three sources said Nexen was closing down its trading operations worldwide, although the majority of activity takes place in Calgary. The company will continue to market its own crude.

This is another story courtesy of the Zero Hedge website.  It was posted there at 8:22 a.m. EDT on Tuesday morning---and I thank reader M.A. for his second story of the day.

View full GSD edition

U.K. to Boost Falklands Defense to Counter Argentina Invasion Fears - Reports

The United Kingdom will bolster its defense in the Falklands amid fears Argentina may increase its military capacity and invade the islands, the Telegraph newspaper reported Tuesday.

In 1982, Argentina invaded the Falkland Islands, a remote British colony in the South Atlantic that Buenos Aires claimed it owned. The armed conflict between the two nations took the lives of 655 Argentinian and 255 British servicemen. The 74-day Falklands war ended when Argentina gave up their bid to control the islands.

U.K. Defense Secretary Michael Fallon will announce troop and equipment reinforcements to the Falklands on Monday, the newspaper reported. The move comes in response to a U.K. Defense Ministry review suggesting an invasion to the islands is likely.

This news item, filed from Moscow, showed up on the sputniknews.com Internet site at 11:09 a.m. Moscow time on their Tuesday morning, which was 3:09 a.m. EDT in Washington.  It's the second offering of the day from Roy Stephens.

View full GSD edition

More capital controls as France declares war…on cash

French paper Le Parisien didn’t mince words in the headline: “La chasse au cash est lancée”. Basically ‘hunting season on cash is launched’.

Under the auspices of fighting terrorism, France’s Minister of Finance, Monsieur Michel Sapin, has rolled out a series of eight new restrictions aimed specifically at minimizing the use of cash.

Among the new restrictions is a prohibition of making more than €1,000 in cash payments (down from €3,000 before).

Large cash withdrawals exceeding €10,000 per month will also now be monitored and reported to the French authorities.

This news item was embedded in yesterday's edition of the Sovereign Man.  A reader sent me the story the other day---and I can't find it now, so this will have to do.  Simon Black sent it our way.

View full GSD edition

Spanish anti-austerity party Podemos wins 15 seats in Andalusia

Podemos, the Spanish anti-austerity party, will be a prominent force in Andalusia’s regional parliament after it won 15 seats in the party’s first election since its ally Syriza triumphed in Greece.

The Socialists, who have held power in Andalusia for more than three decades, will continue to govern the region. Lead by Susana Díaz, they won 35% percent of the vote, earning them 47 seats, shy of an outright majority.

“Andalusians have made their voices heard through the ballot box,” Díaz, 40, said on Sunday as the results came in.

The election held up Spain’s two-party system, albeit in a weakened state. The People’s party came in second with 27% of the vote, or 33 seats, but the party of prime minister Mariano Rajoy was the biggest loser on the day as the result was a steep drop from the 50 seats it won in the 2012 elections.

This news item appeared on theguardian.com website at 1:14 a.m. GMT on Monday morning---and I thank Roy Stephens for sending it our way.

View full GSD edition

European Central Bank to ban embattled Greek banks from holding government bonds

The European Central Bank is set to tighten the noose on Greece a day after the president of the Bank denied the institution was “blackmailing” Athens into agreeing to bail-out conditions.

According to reports, the ECB will move to officially ban Greek banks from increasing their holdings of the country’s short-term sovereign debt, in a bid to break a potentially toxic link between lenders and the stricken sovereign.

The restriction will place a further squeeze on the cash-strapped Greek government, which could run out of money to pay wages and pensions by the end of next month.

Speaking to the European Parliament on Monday, Mario Draghi denied the ECB was acting unfairly towards the Leftist government: “We haven’t created any rule for Greece, rules were in place and they’ve been applied,” said Mr Draghi.

This rather brief news item was posted on The Telegraph's website at 9:00 p.m. GMT yesterday evening---and I found it in the wee hours of this morning.  It's definitely worth reading.

View full GSD edition

$100bn NATO claim: Serbian NGOs seek compensation for Yugoslavia bombing

Two non-governmental organizations have said NATO should be required to pay compensation for the massive damage inflicted during the 1999 bombing campaign against Yugoslavia.

A meeting of the Belgrade Forum for the World of Equals and the Club of Generals and Admirals in Belgrade presented an initiative to hold 28-member NATO financially accountable for the damage that Yugoslavia sustained in the attacks.

Serbian experts put the price tag of the devastation between $60 and $100 billion.

Retired General Jovo Milanovic said that NATO’s military offensive, which was unsanctioned by the United Nations, represented "a violation of all norms of international law that caused enormous material damage to Yugoslavia and huge human casualties,” Tass quoted him as saying.

This very interesting article put in an appearance on the Russia Today website at 12:34 p.m. Moscow time yesterday afternoon---and once again I thank Roy Stephens for sharing it with us.

View full GSD edition

Some 10,000 miners go on strike in western Ukraine

Some 10,000 miners are taking part in a protest rally in the city of Chervonohrad in western Ukraine’s Lviv Region, all seven mines of the Lvovugol enterprise have been shut down, the Confederation of Free Trade Unions (CFTU) of Ukraine reported Tuesday.

"Ten thousand miners have stopped work and entered a new phase of an early strike. They are demanding that closure of mines be stopped, and are insisting on the resignation of Energy and Coal Industry Minister [Vladimir] Demchishin," chairman of the Independent Trade Union of Ukraine’s Miners Mikhail Volynets said.

Miners are holding posters where their key demands are written: resignation of [Energy and Coal Industry Minister] Demchishin and full repayment of wage arrears for January and February [as of March 24, only 10 million hryvnias out of 95 million have been paid].

This story, filed from Kiev, showed up on the tass.ru Internet site at 9:03 p.m.  on their Tuesday evening---and it's another contribution from Roy Stephens.

View full GSD edition

Russian Duma may reauthorize Putin to send the Russian Army into Ukraine

“The Russian Parliament ought to once again give the President of the Russian Federation to use armed force in Ukraine if the U.S. decides to send sizable arms supplies to that country.” This announcement was made by the First Deputy Chairman of the “Just Russia” faction, Mikhail Emelyanov.

The U.S. House of Representatives adopted a resolution on Tuesday recommending the U.S. president to approve arms supplies to Ukraine. The resolution calls on the president to “use the authority provided by Congress to furnish Ukraine with lethal defensive weapons.” According to the authors of the resolution, this measure would “increase the Ukrainian nation’s ability to defend its sovereignty.” The authors of the resolution also exclusively blame Russia for the deaths suffered during the conflict in Eastern Ukraine. At the same time, they ignore the fact that a significant portion of the refugees is in Russia.

“We believe that our parliament should not ignore this resolution. If the U.S. begins genuine lethal weaponry supplies to Ukraine, we should not be shy about supporting the militia, including with weapons, and to give the president the right to send military units on to Ukrainian territory,” Emelyanov told journalists.

In his view, Russia cannot allow Ukraine to be transformed into an “international militant aimed at Russia.”

This interesting---and not entirely surprising commentary showed up on the fortruss.blogspot.ca Internet site yesterday---and it's another contribution from Roy Stephens.

View full GSD edition

Moscow demands removal of U.S. nuclear missiles in Europe

Russia increased tension over NATO nuclear missiles Tuesday with a demand that the United States remove all non-strategic nuclear weapons from Europe.

Russian Foreign Ministry spokesman Alexander Lukashevich referred to comments by Jen Psaki, his counterpart at the U.S. State Department, that U.S. missiles are under constant U.S. control, as distorted. He added that deployment of U.S. missiles in European NATO countries is a violation of the 1968 Treaty on Nuclear Weapons Non-Proliferation.

Lukashevich's remarks came after tensions, already ratcheted upward by Russia's contention that it could place nuclear weapons in Crimea, increased over the weekend with the suggestion by a Russian diplomat that the Danish Navy's inclusion of radar on one ship, to involve it in NATO's missile shield, could make Denmark a nuclear target.

This UPI article, filed from Moscow, was posted on their website at 11:18 a.m. EDT yesterday morning---and it is, once again, courtesy of Roy Stephens.

View full GSD edition

Russian foreign minister: attempts to organize state coup in Venezuela inadmissible

Russian Foreign Minister Sergey Lavrov said on Tuesday any attempts to interfere into Venezuela’s domestic affairs and the United States’ sanctions against Venezuelan citizens are inadmissible.

"Russia and Cuba have reiterated their solidarity with the people of Venezuela, with the legitimate authorities of that country. We consider any attempts to interfere into domestic affairs of that state, illegal sanctions imposed by the United States against a number of Venezuelan citizens inadmissible," Lavrov told journalists during his visit to Havana.

This brief news item, filed from Havana, showed up on the tass.ru website at 9:29 p.m. Moscow time on their Friday evening, which was 1:29 p.m. in Washington.  This is also courtesy of Roy S.

View full GSD edition

Anti-Russian propaganda is ‘unconvincing’, because Western narrative is false

You really couldn’t make it up. Almost 24 million people in the E.U. are unemployed. The Greek debt crisis has yet to be resolved. An Islamic State terrorist attack in Tunis, just over 100 miles from Italy. The ever-worsening problem of climate change.

And what are the E.U. elite talking about? How best to counter ‘Russia’s ongoing disinformation campaigns’. It’s good to know they’ve got their priorities right, isn't it?

At last week’s summit in Brussels, E.U. leaders discussed a range of options, one of which could include the setting up of a new Russian-language TV channel funded by European taxpayers.

A timetable has been laid out: we’re told the E.U.-funded European Endowment for Democracy will present media proposals to a summit in Latvia on May 21-22, and that E.U. foreign policy chief Federica Mogherini will finalize the plans by the end of June.

This excellent op-edge piece put in an appearance on the Russia Today website on Monday afternoon Moscow time.  I was saving it for Saturday, but thought it worth posting now.  It's definitely worth reading---and it's another offering from Roy Stephens.

View full GSD edition

Saudi Arabia Wooing Fired U.S. Shale Workers to ‘Join Our Team’

Workers fired from U.S. shale fields after the collapse in oil prices could soon have a new boss: the nation some blame for driving that decline.

The state-owned Saudi Arabian Oil Co., also known as Saudi Aramco, is posting new job ads online aiming to snap up experts in extracting oil from shale as the country seeks to become a leader in that rapidly expanding effort. Tens of thousands of U.S. workers have been fired since November as oil prices plunged because of oversupplies, driven in part by an OPEC decision supported by Saudi Arabia.

That’s now giving Saudi Aramco a better chance to lure experienced workers to its own shale formations. Difficult living conditions had previously made the country a hard sell, said Tobias Read, chief executive officer of Swift Worldwide Resources, a recruiting firm.

“We’ve seen people who have historically been reticent to look at Saudi Arabia who are now more accepting of a job there,” Read said in an interview.

This Bloomberg story is nine days old---and was posted on their Internet site last Monday.  The reader that sent it to me wishes to remain anonymous.

View full GSD edition

Beijing to Shut All Major Coal Power Plants to Cut Pollution

Beijing, where pollution averaged more than twice China’s national standard last year, will close the last of its four major coal-fired power plants next year.

The capital city will shutter China Huaneng Group Corp.’s 845-megawatt power plant in 2016, after last week closing plants owned by Guohua Electric Power Corp. and Beijing Energy Investment Holding Co., according to a statement Monday on the website of the city’s economic planning agency. A fourth major power plant, owned by China Datang Corp., was shut last year.

The facilities will be replaced by four gas-fired stations with capacity to supply 2.6 times more electricity than the coal plants.

The closures are part of a broader trend in China, which is the world’s biggest carbon emitter. Facing pressure at home and abroad, policy makers are racing to address the environmental damage seen as a byproduct of breakneck economic growth. Beijing plans to cut annual coal consumption by 13 million metric tons by 2017 from the 2012 level in a bid to slash the concentration of pollutants.

This short but interesting Bloomberg article, filed from Beijing, showed up on their Internet site at 9:52 p.m. Denver time on Monday evening---and I thank reader M.A. for sending it our way.

View full GSD edition

Costa Rica is now running completely on renewable energy

Costa Rica is running without having to burn a single fossil fuel, and it’s been doing so for 75 straight days.

Thanks to some heavy rainfall this year, Costa Rica’s hydropower plants alone are generating nearly enough electricity to power the entire country. With a boost from geothermal, solar, and wind energy sources, the country doesn’t need an ounce of coal or petroleum to keep the lights on. Of course, the country has a lot of things going in its favor. Costa Rica is a small nation, has less than 5 million people, doesn’t have much of a manufacturing industry that would require a lot of energy, and is filled with volcanoes and other topographical features that lend themselves to renewable energy.

Nonetheless, it is both a noble and significant feat for a nation of any size to eschew fossil fuels completely.

Reader H.W., who went me this article last night, had this to say about it---"I used to live in Costa Rica---and can tell you this: Energy is super expensive. I suppose one can live completely with green energy, but today that price is steep."  That's probably a fair assessment of the price of "green" energy anywhere at the moment.  It was posted on the qz.com Internet site on Monday sometime.

View full GSD edition

Freeport-McMoRan: $1.1 billion in dividends just vanished

Freeport-McMoRan stunned investors Tuesday by slashing its dividend 84% – erasing a lucrative income stream for investors and serving up a big reminder these payments aren’t guaranteed.

The company, which explores for materials like copper and gold, announced it is cutting its quarterly dividend down from 31.25 cents a share down to just 5 cents. That’s a massive cut in an implied annual dividend of $1.25 a share to $0.20 a share.

Freeport’s cut is staggering. The reduction takes away $1.05 a share from investors – which is no small sum considering the company has 1.04 billion shares outstanding. All told that amounts to $1.1 billion in lost dividends. The executives will feel the loss, too. CEO Richard Adkerson will miss out on $1.6 million a year in lost dividends.

What makes this cut sting even more is that dividend reductions are extremely rare in the materials sector. There have only been 17 dividend cuts by companies in the S&P 500 materials sector in the past 10 years, including Freeport, says S&P Dow Jones Indices.

Of course, the folks that run this company would never look for the reason why gold and copper are priced the way they are today.  This brief news item showed up on the usatoday.com Internet site at 12:48 p.m. EDT yesterday---and I thank Washington state reader S.A. for sliding it into my in-box shortly after it was posted.

View full GSD edition

The Secret of Success in Mineral Exploration -- Louis James, Casey Research

As an investor, I want to bet on the jockeys who win the most races, not just the best-looking horses. So, while I’m no Tom Peters or Stephen Covey, I’ve made a study of success over the last decade. The critical question for a metals investor: what does it takes to be a serially successful mine-finder?

Before I give you the answer, let me give you a little context on just how difficult this is. It’s not as simple as looking for a needle in a haystack; it’s more like looking for a needle in a vast field of steel haystacks, each one of which will give your metal detector false positives. And it’s very expensive to drill holes into them, which is the only way you can test for a needle’s hidden presence.

The odds of any given anomaly actually indicating the presence of a mineable needle are something like one in 300. It typically takes about 10 years to get the needle out of the haystack, and commodity price fluctuations can turn cash-cow operations into money bleeders in the blink of an eye. Pricked by the fickle needle of fate.

So, why would anyone invest in such an uncertain business? Because the world simply cannot function without metals, and the rewards for those who deliver them can be spectacular. Doubling or tripling one’s investment on a successful mineral discovery is routine, and 1,000% gains (10-baggers) are common enough that resource speculators have strategies for bagging them. It’s rare, but 50 and even 100 times one’s initial investment do happen in this volatile sector.

This commentary by Louis put in an appearance on the Casey Research website yesterday---and it's worth reading.

View full GSD edition

HSBC Not Closing Gold Vaults – Safety Deposit Boxes of Clients‏ Being Closed

A rumor that HSBC is rapidly and quietly closing gold vaults where clients gold bullion was stored and gold in the GLD ETF is stored has been swirling around the Internet.

After conversations with key players in the industry including a bullion dealer who used the safety deposit boxes for storage and delivery to clients, we can now confidently say that the speculation was incorrect.

What HSBC is actually doing is closing its safety deposit box facilities some of which are in vaults and strong rooms in branches. The vaults are not specialist gold vaults rather standard vaults or strong rooms which contain safety deposit boxes. These safety deposit boxes hold all sorts of valuables – from legal documents, to family heirlooms, to art works, to jewellery and of course bullion coins and bars.

Availability of safety deposit boxes is in decline in Britain and much of the world. Costs of security, insurance and opportunity to use such facilities in a more profitable manner are driving the closures. Banks in Ireland including the Bank of Ireland claim that the safety deposit boxes are “causing an unacceptable health, safety and security risk in some branches.”

The lunatic fringe had a field day with this story when it first appeared a month or so ago, as they took the HSBC press release totally out of context---and I'm happy to see it set straight in Mark O'Byrne's commentary over at the goldcore.com Internet site  on Tuesday.  Brad Robertson was the first reader through the door with it---and it's worth our time.

View full GSD edition

Gold Markets May Finally Have Something To Cheer About

Momentum has been building amongst gold stocks this week. With gauges like the S&P/TSX Global Gold Index up 9% over the last week of trading.

The interesting thing is, this rebound has come with very little movement in the gold price itself. As I write, bullion is languishing below $1,190 per ounce.

But a few events are on the horizon that could really give gold investors something to cheer about. In some of the largest consuming nations on the planet.

A prime example being regulatory changes announced last week in the world’s top gold buyer, China. Which should go a long way toward increasing bullion demand in this part of the world.

This bit of shallow main stream fluff about gold appeared on the finance.yahoo.com Internet site yesterday morning EDT---and it's courtesy of Howard Wiener.

View full GSD edition

Koos Jansen: Indian gold imports exploding in March

India's gold imports are soaring again, Bullion Star market analyst and GATA consultant Koos Jansen wrote yesterday, even as the Indian government is searching for ways to "monetize" -- or, really, paperize -- the metal.

Jansen's commentary is headlined "Indian Gold Imports Exploding in March" and it was posted on the Singapore Internet site bullionstar.com.  I thank Chris Powell for writing the above paragraph of introduction.  It's definitely worth reading.

View full GSD edition